Alipay "launches" digital RMB payment, allowing user-to-user transfers

This article is from Caixin, authored by Jiang Fan.
Digital RMB has made new progress. Recently, Caixin reporters found that the Alipay app has launched a digital RMB module, which supports not only consumption but also transfers between users.

Some circulation service institutions are also making adequate preparations for the launch of digital RMB. The industry refers to the "2.5-layer" digital RMB ecosystem as being in the process of establishment. Industry insiders believe that the future ecosystem of digital RMB will become increasingly broad, forming extensive scenario models and new business models around digital RMB.
Alipay Launches New Features for Digital RMB
Recently, the Alipay app has launched the digital RMB module for some users. Caixin reporters learned that test users who are on the Alipay whitelist can see the "Digital RMB" module in the "My" section of the Alipay app, alongside Huabei, bank cards, and others.
By clicking on the "Digital RMB" module and entering their name and other information as instructed, users can register for a digital RMB wallet with MyBank. This wallet can be used either "in real name" or "anonymously," but one Alipay account can only open one wallet. After registration, each wallet will receive a unique wallet number.
The wallet provides services such as "deposit" and "withdrawal," with the withdrawal function supporting transfers of digital RMB to bank savings cards, while the deposit function allows funds to be transferred from savings cards to the digital RMB wallet. However, according to Caixin reporters, the Alipay digital RMB wallet currently only supports binding savings cards from six banks: ICBC, ABC, BOC, CCB, Bank of Communications, Postal Savings Bank, and MyBank.
It is worth noting that this Alipay digital RMB wallet also supports user transfer and payment services. The transfer methods can support "wallet number transfer" as well as "phone number or email transfer." This means that when transferring, users can input the recipient's wallet number or their phone or email information to complete the transfer. Payments can be made via QR code, and users can set a maximum amount for receiving payments.
Previously, the digital RMB operating institutions expanded, and in addition to the six major state-owned banks that already launched digital RMB wallets, MyBank (Alipay) has recently also joined the "Digital RMB app." It is reported that MyBank, as one of the digital RMB operating institutions, has conducted pilot programs in various scenarios such as Hema, RT-Mart, Tmall Supermarket, Hello Bike, and Shanghai Public Transport.
However, Caixin reporters found that although the MyBank digital wallet can be registered in the "Digital RMB app," it is currently not usable after successful registration, with the system indicating that "the MyBank wallet function is still under development."
Additionally, in the digital RMB app, another operating institution, WeBank, has not yet launched. However, industry insiders claim that Tencent is also actively preparing internally, and WeBank's related wallet may soon be launched. Previously, a Tencent official revealed that Tencent has been deeply involved in the design, development, and operation of digital RMB, providing support for the project's implementation. In the future, Tencent will further conduct controllable pilot programs under the guidance of the central bank.
"2.5-layer" Institutions: The Behind-the-Scenes Force of Digital RMB
Currently, the "dual-layer operating system" of digital RMB has been basically established. The central bank is responsible for creating digital RMB as the first layer; while the second layer consists of eight banks, including the six major state-owned banks, MyBank, and WeBank, which are the "exchange operating institutions" responsible for exchanging digital RMB to the public.
In addition to the aforementioned eight digital RMB operating institutions, other banks and institutions are also actively preparing for digital RMB wallets. According to the central bank's design, besides the "exchange operating institutions," there are also "circulation service institutions," which define their position as "2.5-layer."
An industry insider told Caixin reporters that there is no concept of "2.5-layer" in the official definition of digital RMB. However, compared to the eight banks that have become operating institutions, these institutions are also a key part of the future promotion of digital RMB. They do not directly exchange digital RMB with the central bank but provide wallets for the public to use digital RMB, thus being positioned between the eight operating institutions and the public, which is why they are referred to as "2.5-layer."
According to informed sources, these "2.5-layer" institutions do not directly own users' digital RMB accounts; they exist merely as a "channel" for using digital RMB. Compared to traditional account-based payment systems, the "2.5-layer" institutions do not need to go through clearing institutions for settlement with operating institutions, which reduces the usage fees of digital RMB and improves efficiency.
"These institutions include other banks besides the eight operating banks, as well as software and hardware scenario providers like Bilibili, Meituan, Huawei, Lakala, and various software and hardware wallet support institutions," said a digital RMB industry insider to Caixin reporters, indicating that these institutions mainly provide usage scenarios and services for digital RMB.
Caixin reporters learned that many "2.5-layer" institutions are actively preparing for digital RMB and view it as an important development opportunity for the future.
Lakala Payment General Manager Chen Lie stated at the 2021 Investor Conference that third-party payment institutions represented by Lakala are positioned in the 2.5-layer service layer, directly providing digital RMB acceptance services to users. Lakala has invested over 30 million in the digital RMB field and plans to continue investing 500 million in the next three years.
According to previous disclosures from Shenzhou Information, the company has served over ten financial institutions in the digital RMB-related field and promoted the implementation of digital wallet functions. Its digital wallet solution released last year, as an important system for supporting digital RMB and developing related businesses, has already been implemented in China Construction Bank, Guangfa Bank, and Beijing Bank. Among them, Guangfa Bank and Beijing Bank are both "2.5-layer" institutions.
Expanding Scenarios: Development Opportunities Still to be Explored
Industry insiders believe that with the successive joining of MyBank and WeBank, scenarios from Ant Group and Tencent will continuously integrate into the digital RMB system. At the same time, with the expansion of "2.5-layer" institutions, there will be more scenarios for digital RMB, which may present business opportunities.
"The biggest feature of digital RMB is 'transaction equals settlement.' The operating layer exchanges digital RMB under the guidance of the central bank, while in the 2.5-layer, besides specific scenarios like Meituan and Didi, the real service providers for other small and medium-sized institutions are Lakala and UnionPay Business," Chen Lie stated, emphasizing that the entire process has reduced the roles of UnionPay, Wanglian, WeChat, and Alipay, marking a significant change in the participants and service providers in the industry.
Change means opportunity. Some digital RMB industry insiders believe that, on one hand, the commercial value of digital RMB in the future may manifest in the scenario end, and compared to traditional payment scenarios, smart contracts may become a potential profit point for future digital RMB. On the other hand, cross-border transactions may also be a breakthrough for the commercialization and profitability of digital RMB in the future.
At the Shenzhou Information 2020 annual performance briefing, company executives also stated that the business opportunities brought by digital RMB lie in the application of digital wallets and the creation of scenarios, which can lead banks that are the first to explore or find more and better scenarios in the application of digital currency to provide richer solutions and services to customers.
Moreover, the "new infrastructure" and other related fields of digital RMB also contain development opportunities.
Combining new technologies like blockchain with scenarios to form a value network will become an important focus for demonstrating the commercial value of digital RMB in the future. "For example, in the field of cross-border e-commerce, during the logistics transportation of the China-Europe Railway, if we can integrate digital currency, digital RMB, and value chain software digital supervision, there is an opportunity to form new business forms. If we can achieve the integration of asset digitization and digital currency, where payment equals settlement, that is where the true value of digital RMB lies," said the aforementioned Shenzhou Information executive.
However, some industry insiders believe that, at present, there is still no clear business model for digital RMB, and various institutions are seeking possible profit models, but it is expected that such profit models will not form and mature in the short term, as the testing of digital RMB is still ongoing, and there is still a long way to go before widespread promotion.